ENBANC

MANUEL O. FUENTES and G.R. No. 178902

LETICIA L. FUENTES,
Petitioners, Present:

Puno, C.J.,
Carpio,
Corona,
Carpio Morales,
Velasco, Jr.,
Nachura,
- versus - Leonardo-De Castro,
Brion,
Peralta,
Bersamin,
Del Castillo,
Abad,
Villarama, Jr.,
Perez, and
Mendoza, JJ.
CONRADO G. ROCA, ANNABELLE R.
JOSON, ROSE MARIE R. CRISTOBAL
and PILAR MALCAMPO, Promulgated:
Respondents.
April 21, 2010
x ---------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:


This case is about a husbands sale of conjugal real property, employing a
challenged affidavit of consent from an estranged wife. The buyers claim valid
consent, loss of right to declare nullity of sale, and prescription.

The Facts and the Case

Sabina Tarroza owned a titled 358-square meter lot in
Canelar, Zamboanga City. On October 11, 1982 she sold it to her son, Tarciano T.
Roca (Tarciano) under a deed of absolute sale.
[1]
But Tarciano did not for the
meantime have the registered title transferred to his name.

Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel
and Leticia Fuentes (the Fuentes spouses). They arranged to meet at the office of
Atty. Romulo D. Plagata whom they asked to prepare the documents of sale. They
later signed an agreement to sell that Atty. Plagata prepared
[2]
dated April 29, 1988,
which agreement expressly stated that it was to take effect in six months.

The agreement required the Fuentes spouses to pay Tarciano a down
payment of P60,000.00 for the transfer of the lots title to him. And, within six
months, Tarciano was to clear the lot of structures and occupants and secure the
consent of his estranged wife, Rosario Gabriel Roca (Rosario), to the sale. Upon
Tarcianos compliance with these conditions, the Fuentes spouses were to take
possession of the lot and pay him an additional P140,000.00 or P160,000.00,
depending on whether or not he succeeded in demolishing the house standing on
it. If Tarciano was unable to comply with these conditions, the Fuentes spouses
would become owners of the lot without any further formality and payment.

The parties left their signed agreement with Atty. Plagata who then worked
on the other requirements of the sale. According to the lawyer, he went to
see Rosario in one of his trips to Manila and had her sign an affidavit of
consent.
[3]
As soon as Tarciano met the other conditions, Atty. Plagata
notarized Rosarios affidavit in Zamboanga City. OnJanuary 11, 1989 Tarciano
executed a deed of absolute sale
[4]
in favor of the Fuentes spouses. They then paid
him the additional P140,000.00 mentioned in their agreement. A new title was
issued in the name of the spouses
[5]
who immediately constructed a building on the
lot. On January 28, 1990 Tarciano passed away, followed by his wife Rosario who
died nine months afterwards.

Eight years later in 1997, the children of Tarciano and Rosario, namely,
respondents Conrado G. Roca, Annabelle R. Joson, and Rose Marie R. Cristobal,
together with Tarcianos sister, Pilar R. Malcampo, represented by her son, John
Paul M. Trinidad (collectively, the Rocas), filed an action for annulment of sale and
reconveyance of the land against the Fuentes spouses before the Regional Trial
Court (RTC) of Zamboanga City in Civil Case 4707. The Rocas claimed that the sale
to the spouses was void since Tarcianos wife, Rosario, did not give her consent to
it. Her signature on the affidavit of consent had been forged. They thus prayed that
the property be reconveyed to them upon reimbursement of the price that the
Fuentes spouses paid Tarciano.
[6]


The spouses denied the Rocas allegations. They presented Atty. Plagata who
testified that he personally saw Rosario sign the affidavit at her residence in
Paco, Manila, onSeptember 15, 1988. He admitted, however, that he notarized the
document in Zamboanga City four months later on January 11, 1989.
[7]
All the
same, the Fuentes spouses pointed out that the claim of forgery was personal
to Rosario and she alone could invoke it. Besides, the four-year prescriptive period
for nullifying the sale on ground of fraud had already lapsed.

Both the Rocas and the Fuentes spouses presented handwriting experts at
the trial. Comparing Rosarios standard signature on the affidavit with those on
various documents she signed, the Rocas expert testified that the signatures were
not written by the same person. Making the same comparison, the spouses expert
concluded that they were.
[8]


On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled
that the action had already prescribed since the ground cited by the Rocas for
annulling the sale, forgery or fraud, already prescribed under Article 1391 of the
Civil Code four years after its discovery. In this case, the Rocas may be deemed to
have notice of the fraud from the date the deed of sale was registered with the
Registry of Deeds and the new title was issued. Here, the Rocas filed their action in
1997, almost nine years after the title was issued to the Fuentes spouses on January
18, 1989.
[9]


Moreover, the Rocas failed to present clear and convincing evidence of the
fraud. Mere variance in the signatures of Rosario was not conclusive proof of
forgery.
[10]
The RTC ruled that, although the Rocas presented a handwriting expert,
the trial court could not be bound by his opinion since the opposing expert witness
contradicted the same. Atty. Plagatas testimony remained technically
unrebutted.
[11]


Finally, the RTC noted that Atty. Plagatas defective notarization of the affidavit
of consent did not invalidate the sale. The law does not require spousal consent to
be on the deed of sale to be valid. Neither does the irregularity vitiate Rosarios
consent. She personally signed the affidavit in the presence of Atty. Plagata.
[12]


On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found
sufficient evidence of forgery and did not give credence to Atty. Plagatas testimony
that he saw Rosario sign the document in Quezon City. Its jurat said
differently. Also, upon comparing the questioned signature with the specimen
signatures, the CA noted significant variance between them. That Tarciano and
Rosario had been living separately for 30 years since 1958 also reinforced the
conclusion that her signature had been forged.

Since Tarciano and Rosario were married in 1950, the CA concluded that their
property relations were governed by the Civil Code under which an action for
annulment of sale on the ground of lack of spousal consent may be brought by the
wife during the marriage within 10 years from the transaction. Consequently, the
action that the Rocas, her heirs, brought in 1997 fell within 10 years of the January
11, 1989 sale.

Considering, however, that the sale between the Fuentes spouses and Tarciano
was merely voidable, the CA held that its annulment entitled the spouses to
reimbursement of what they paid him plus legal interest computed from the filing
of the complaint until actual payment. Since the Fuentes spouses were also
builders in good faith, they were entitled under Article 448 of the Civil Code to
payment of the value of the improvements they introduced on the lot. The CA did
not award damages in favor of the Rocas and deleted the award of attorneys fees
to the Fuentes spouses.
[13]


Unsatisfied with the CA decision, the Fuentes spouses came to this court by
petition for review.
[14]


The Issues Presented

The case presents the following issues:

1. Whether or not Rosarios signature on the document of consent to her
husband Tarcianos sale of their conjugal land to the Fuentes spouses was forged;

2. Whether or not the Rocas action for the declaration of nullity of that
sale to the spouses already prescribed; and

3. Whether or not only Rosario, the wife whose consent was not had,
could bring the action to annul that sale.

The Courts Rulings

First. The key issue in this case is whether or not Rosarios signature on the
document of consent had been forged. For, if the signature were genuine, the fact
that she gave her consent to her husbands sale of the conjugal land would render
the other issues merely academic.

The CA found that Rosarios signature had been forged. The CA observed a
marked difference between her signature on the affidavit of consent
[15]
and her
specimen signatures.
[16]
The CA gave no weight to Atty. Plagatas testimony that
he saw Rosario sign the document in Manila on September 15, 1988 since this
clashed with his declaration in the jurat that Rosario signed the affidavit in
Zamboanga City on January 11, 1989.

The Court agrees with the CAs observation that Rosarios signature strokes
on the affidavit appears heavy, deliberate, and forced. Her specimen signatures,
on the other hand, are consistently of a lighter stroke and more fluid. The way the
letters R and s were written is also remarkably different. The variance is
obvious even to the untrained eye.

Significantly, Rosarios specimen signatures were made at about the time
that she signed the supposed affidavit of consent. They were, therefore, reliable
standards for comparison. The Fuentes spouses presented no evidence
that Rosario suffered from any illness or disease that accounted for the variance in
her signature when she signed the affidavit of consent. Notably, Rosario had been
living separately from Tarciano for 30 years since 1958. And she resided so far away
in Manila. It would have been quite tempting for Tarciano to just forge her
signature and avoid the risk that she would not give her consent to the sale or
demand a stiff price for it.

What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of
consent. That jurat declared that Rosario swore to the document and signed it
in ZamboangaCity on January 11, 1989 when, as Atty. Plagata testified, she
supposedly signed it about four months earlier at her residence in
Paco, Manila on September 15, 1988. While a defective notarization will merely
strip the document of its public character and reduce it to a private instrument,
that falsified jurat, taken together with the marks of forgery in the signature, dooms
such document as proof of Rosarios consent to the sale of the land. That the
Fuentes spouses honestly relied on the notarized affidavit as proof of Rosarios
consent does not matter. The sale is still void without an authentic consent.

Second. Contrary to the ruling of the Court of Appeals, the law that applies
to this case is the Family Code, not the Civil Code. Although Tarciano and Rosario
got married in 1950, Tarciano sold the conjugal property to the Fuentes spouses
on January 11, 1989, a few months after the Family Code took effect on August 3,
1988.

When Tarciano married Rosario, the Civil Code put in place the system of
conjugal partnership of gains on their property relations. While its Article 165
made Tarciano the sole administrator of the conjugal partnership, Article
166
[17]
prohibited him from selling commonly owned real property without his
wifes consent. Still, if he sold the same without his wifes consent, the sale is not
void but merely voidable. Article 173 gave Rosario the right to have the sale
annulled during the marriage within ten years from the date of the sale. Failing in
that, she or her heirs may demand, after dissolution of the marriage, only the value
of the property that Tarciano fraudulently sold. Thus:

Art. 173. The wife may, during the marriage, and within ten years from
the transaction questioned, ask the courts for the annulment of any contract
of the husband entered into without her consent, when such consent is
required, or any act or contract of the husband which tends to defraud her or
impair her interest in the conjugal partnership property. Should the wife fail
to exercise this right, she or her heirs, after the dissolution of the marriage,
may demand the value of property fraudulently alienated by the husband.

But, as already stated, the Family Code took effect on August 3, 1988. Its
Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I of
the Civil Code on Property Relations Between Husband and Wife.
[18]
Further, the
Family Code provisions were also made to apply to already existing conjugal
partnerships without prejudice to vested rights.
[19]
Thus:

Art. 105. x x x The provisions of this Chapter shall also apply to
conjugal partnerships of gains already established between spouses
before the effectivity of this Code, without prejudice to vested rights
already acquired in accordance with the Civil Code or other laws, as
provided in Article 256. (n)

Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses
on January 11, 1989, the law that governed the disposal of that lot was already the
Family Code.

In contrast to Article 173 of the Civil Code, Article 124 of the Family Code
does not provide a period within which the wife who gave no consent may assail
her husbands sale of the real property. It simply provides that without the other
spouses written consent or a court order allowing the sale, the same would be
void. Article 124 thus provides:

Art. 124. x x x In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of the conjugal
properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition
or encumbrance which must have the authority of the court or the
written consent of the other spouse. In the absence of such authority
or consent, the disposition or encumbrance shall be void. x x x

Under the provisions of the Civil Code governing contracts, a void or
inexistent contract has no force and effect from the very beginning. And this rule
applies to contracts that are declared void by positive provision of law,
[20]
as in the
case of a sale of conjugal property without the other spouses written consent. A
void contract is equivalent to nothing and is absolutely wanting in civil effects. It
cannot be validated either by ratification or prescription.
[21]


But, although a void contract has no legal effects even if no action is taken to
set it aside, when any of its terms have been performed, an action to declare its
inexistence is necessary to allow restitution of what has been given under it.
[22]
This
action, according to Article 1410 of the Civil Code does not prescribe. Thus:

Art. 1410. The action or defense for the declaration of the
inexistence of a contract does not prescribe.

Here, the Rocas filed an action against the Fuentes spouses in 1997 for
annulment of sale and reconveyance of the real property that Tarciano sold
without their mothers (his wifes) written consent. The passage of time did not
erode the right to bring such an action.

Besides, even assuming that it is the Civil Code that applies to the transaction
as the CA held, Article 173 provides that the wife may bring an action for annulment
of sale on the ground of lack of spousal consent during the marriage within 10 years
from the transaction. Consequently, the action that the Rocas, her heirs, brought
in 1997 fell within 10 years of the January 11, 1989 sale. It did not yet prescribe.

The Fuentes spouses of course argue that the RTC nullified the sale to them
based on fraud and that, therefore, the applicable prescriptive period should be
that which applies to fraudulent transactions, namely, four years from its
discovery. Since notice of the sale may be deemed given to the Rocas when it was
registered with the Registry of Deeds in 1989, their right of action already
prescribed in 1993.

But, if there had been a victim of fraud in this case, it would be the Fuentes
spouses in that they appeared to have agreed to buy the property upon an honest
belief thatRosarios written consent to the sale was genuine. They had four years
then from the time they learned that her signature had been forged within which
to file an action to annul the sale and get back their money plus damages. They
never exercised the right.

If, on the other hand, Rosario had agreed to sign the document of consent
upon a false representation that the property would go to their children, not to
strangers, and it turned out that this was not the case, then she would have four
years from the time she discovered the fraud within which to file an action to
declare the sale void. But that is not the case here. Rosario was not a victim of
fraud or misrepresentation. Her consent was simply not obtained at all. She lost
nothing since the sale without her written consent was void. Ultimately, the Rocas
ground for annulment is not forgery but the lack of written consent of their mother
to the sale. The forgery is merely evidence of lack of consent.

Third. The Fuentes spouses point out that it was to Rosario, whose consent
was not obtained, that the law gave the right to bring an action to declare void her
husbands sale of conjugal land. But here, Rosario died in 1990, the year after the
sale. Does this mean that the right to have the sale declared void is forever lost?

The answer is no. As stated above, that sale was void from the
beginning. Consequently, the land remained the property of Tarciano and Rosario
despite that sale. When the two died, they passed on the ownership of the
property to their heirs, namely, the Rocas.
[23]
As lawful owners, the Rocas had the
right, under Article 429 of the Civil Code, to exclude any person from its enjoyment
and disposal.

In fairness to the Fuentes spouses, however, they should be entitled, among
other things, to recover from Tarcianos heirs, the Rocas, the P200,000.00 that they
paid him, with legal interest until fully paid, chargeable against his estate.

Further, the Fuentes spouses appear to have acted in good faith in entering
the land and building improvements on it. Atty. Plagata, whom the parties mutually
entrusted with closing and documenting the transaction, represented that he
got Rosarios signature on the affidavit of consent. The Fuentes spouses had no
reason to believe that the lawyer had violated his commission and his oath. They
had no way of knowing that Rosario did not come to Zamboanga to give her
consent. There is no evidence that they had a premonition that the requirement
of consent presented some difficulty. Indeed, they willingly made a 30 percent
down payment on the selling price months earlier on the assurance that it was
forthcoming.

Further, the notarized document appears to have comforted the Fuentes
spouses that everything was already in order when Tarciano executed a deed of
absolute sale in their favor on January 11, 1989. In fact, they paid the balance due
him. And, acting on the documents submitted to it, the Register of Deeds of
Zamboanga City issued a new title in the names of the Fuentes spouses. It was only
after all these had passed that the spouses entered the property and built on it. He
is deemed a possessor in good faith, said Article 526 of the Civil Code, who is not
aware that there exists in his title or mode of acquisition any flaw which invalidates
it.

As possessor in good faith, the Fuentes spouses were under no obligation to
pay for their stay on the property prior to its legal interruption by a final judgment
against them.
[24]
What is more, they are entitled under Article 448 to indemnity for
the improvements they introduced into the property with a right of retention until
the reimbursement is made. Thus:

Art. 448. The owner of the land on which anything has been
built, sown or planted in good faith, shall have the right to appropriate
as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who
built or planted to pay the price of the land, and the one who sowed,
the proper rent. However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that of the building
or trees. In such case, he shall pay reasonable rent, if the owner of the
land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof. (361a)

The Rocas shall of course have the option, pursuant to Article 546 of the Civil
Code,
[25]
of indemnifying the Fuentes spouses for the costs of the improvements or
paying the increase in value which the property may have acquired by reason of
such improvements.

WHEREFORE, the Court DENIES the petition and AFFIRMS WITH
MODIFICATION the decision of the Court of Appeals in CA-G.R. CV 00531
dated February 27, 2007 as follows:

1. The deed of sale dated January 11, 1989 that Tarciano T. Roca executed
in favor of Manuel O. Fuentes, married to Leticia L. Fuentes, as well as the Transfer
Certificate of Title T-90,981 that the Register of Deeds of Zamboanga City issued in
the names of the latter spouses pursuant to that deed of sale are DECLARED void;

2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate
Transfer Certificate of Title 3533 in the name of Tarciano T. Roca, married to
Rosario Gabriel;

3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are ORDERED to pay petitioner spouses Manuel and
Leticia Fuentes the P200,000.00 that the latter paid Tarciano T. Roca, with legal
interest from January 11, 1989 until fully paid, chargeable against his estate;

4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.
Cristobal, and Pilar Malcampo are further ORDERED, at their option, to indemnify
petitioner spouses Manuel and Leticia Fuentes with their expenses for introducing
useful improvements on the subject land or pay the increase in value which it may
have acquired by reason of those improvements, with the spouses entitled to the
right of retention of the land until the indemnity is made; and

5. The RTC of Zamboanga City from which this case originated
is DIRECTED to receive evidence and determine the amount of indemnity to which
petitioner spouses Manuel and Leticia Fuentes are entitled.

SO ORDERED.